Combined normal/buy to let mortgage

SuperAllyB

Hi, not sure if anyone can advise but no harm in asking about the unusual situation we find ourselves in.

I have had a farmhouse tied to my employment for 16 years, but moved out 2 years ago due to the state of the house. We bought a nice bungalow in the local village with an (approx) 70% LTV residential mortgage over 19 years to tie in with my expected retirement date.

The farmhouse has since been extensively renovated and I have been promoted at work but on condition that I agreed to move back to farm once renovations are completed (moved back last week).

Our plan was to remortgage (2 year fixed deal ending anyway) with a buy to let deal although still repayment so that we own the property by the time I eventually retire, but our broker (we have lifetime advice from Sequence) calculates that we would require a rental which wouldn't be remotely achievable in our location.

Before we put the house on the market, I am trying to find alternative solutions. Total borrowing needs to be approx £110k.

Does anyone know of any companies that would assess jointly on my salary and/or buy to let? I could easily repay at least £3-400 a month from my salary (no rent or council tax to pay) leaving a lot less to satisfy the buy to let rules. We were quoted approx £630 on a buy to let meaning we would need to achieve a rent of £950 to keep lenders happy, so by my calculations if I paid £300 that would leave the buy to let element to contribute £330 meaning a rent of £495 would satisfy them. A rent of £700 should be easily achievable and would also overpay by any surplus allowing for other costs.

Alternatively, is there such a thing as an interest only buy to let mortgage that would allow us to make "overpayments" every month towards the capital?

I am planning to ask our adviser these same questions but she seemed unsure about anything along these lines in our initial meeting.

Thanks, Ally

kingstreet

There are lenders who "top-slice" allowing surplus personal income to supplement a lower than usual rental income estimate.

Sounds like your "lifetime" fee to Sequence was a waste of money and the mortgage is too small to raise much interest on commission. No surprise there.

SuperAllyB

Thank you for your reply. At least I know it's worth searching for a suitable deal.

Regards Sequence, we have bought and sold a student flat and bought the property in question for one £499 fee, so have probably had our money's worth although no use on this occasion.

[Deleted User]

Some lenders will let you do a residentisl mortgage when it's going to be rented out if you are living in tied accommodation.
Used to do quite a lot when I worked in Newmarket and all the people living in work accommodation provided by the stable yards

JayCeeEssex

Just as an aside...you say that you want your mortgage to remain on a repayment basis as a BTL. In fairness to Sequence, if they calculated a BTL on that basis it will get no where near affordability! That is far from rocket science!
To ensure that a BTL fits affordability, the calculation should be worked out on an Interest Only basis with sale of the property as an exit route. From the figures you are quoting, that should fit affordability with almost any lender quite comfortably.
Most BTL deals that I come across have a 10% overpayment facility, some more than that! In any case you are quite at liberty to set your mortgage up as Interest Only and then after it is all up and running ask the lender to switch to repayment! Simples!
As for your "lifetime advice" fee you paid Sequence, I would be having a serious discussion about how much they intended on refunding!

SuperAllyB

Not sure if she reads this forum lol, but the adviser phoned this afternoon saying shed looked at it again and recommending more or less what you just have.

Thanks for all replies

SuperAllyB

Still struggling to make progress here.

Of the panel used by Sequence, only NatWest will consider a buy-to-let where we don't own any other property (living in tied accomodation) but with our circumstances and being first time landlords they will only lend on our income and affordability regardless of the LtV on the property.

Have spoken to our current lender (Halifax/BofS) who won't offer a buy-to-let because we have previously lived in the property. Adviser suggested that other companies may but it was considered a commercial buy-to-let in those circumstances.

Unfortunately googling "commercial buy-to-let" comes up with sites either for companies letting property or for letting commercial property.

Can anyone suggest any companies which might offer what we're looking for? Or suggest terms that we can use in Google to get more appropriate responses.

Thanks

[Deleted User]

Sequence have one of the smallest lender panels of any mainstream brokerage. Its beyond a joke that they charge what they do for what they offer.

As far as I can tell you are overcomplicating the transaction. You need a lender who will do a BTL on a property you once lived in at 70% ltv and borrowing of £110k.

Based on rough calculations, worst case scenario I think a rent of £730 would be needed for lender to be happy.
Some lenders have more generous calculations so maybe this could go as low as £575 a month.

So what rent do you expect to achieve?

Beyond this, there are plenty lenders who will do non-owner occupiers, and plenty doing BTL when you used to live there. Put them together and you lose a few but in reality I don't see why this case is such an issue.

You should be doing calculations on interest only otherwise it will never fit. And then just overpay mortgage within limits to treat it as a repayment.

Your main issue here so far is

1. Halifax hate doing BTL direct now. Want brokers to do it all through their other brand BM solutions. Presumably they don't trust their own advisors to do it properly.
2. Your broker works for sequence with about 4 or 5 decent BTL lenders to choose from.

Get a whole of market broker who has access to more lenders and this should sail through

SuperAllyB

Thank you, will look for local independent advisor on Monday.

I think £700-750 might be the ceiling around here but have a couple of agents coming on Monday to give us a better picture.

LRmortgage

I don’t know enough about the case to be certain. However, based on the information provided in your post this shouldn’t be too hard to place by a broker with a decent panel. As has been mentioned above.

Find a better broker would be my advice and stay away from “lifetime” fees. I charge a fee for every mortgage I place, it means I’m engaged and incentivised every case, not looking for the next case I can charge a lifetime fee on.

Thrugelmir

Have you factored tax into your calculations? If you plan to repay the mortgage. Only the interest element of the mortgage repayment is tax deductible.